Economic activity across the globe plunged in the spring of 2020 as governments implemented measures to limit the spread of COVID-19. This reduction in economic activity is reflected in the substantial GDP decline across economies in 2020—with the exception of China. But the global recovery is now underway.
The pace of recovery for individual economies will depend on the fiscal measures adopted in response to the crisis, the public health response, and underlying economic conditions going into the crisis. Countries that are battling a second outbreak of the virus, depend on small and medium-sized enterprises for a significant portion of their economic output, or rely on international trade will endure slower recoveries.
China is a bright spot in the global economic outlook. The Chinese economy is on target to reach 3 percent growth for 2020, well below trend for China, but a sign that the Chinese recovery is less fragile than many believed early in the pandemic.
This PIIE Chart was adapted from Karen Dynan’s presentation at the October 8, 2020 event, Global Economic Prospects: Fall 2020.